Energy: A New Green Paradigm

As the GOP convention approaches, I am sitting here listening to the Republicans explain their platform on Energy Policy on TV:  Increased Oil Drilling, building the keystone pipeline,  extracting oil and gas from the Canadian Tar Sands, increased use of Coal, relaxed standards for offshore drilling…..everything appears geared towards an explosion of dirty energy resources for “cheap energy” and Big Oil Profiteering.

Climate Change?  The Republicans don’t think government should address the issue.

Are they reading any news reports at all? Here are some of the news reports from the last 3 weeks:

In Iowa, about 58,000 fish died along a 42-mile stretch of the Des Moines River.   Biologists measured the water at 97 degrees in multiple spots.  (Toledo Blade)

In Connecticut, the Millstone Nuclear Power Station had to be shut down because the water in the Long Island Sound was too warm to effectively cool the reactor. (WWLP)

In Illinois, fish are dying in record numbers as state officials have raised the temperature at which water-cooled power plants can return water to area lakes and rivers. Hundreds of millions of gallons of water per day are now being returned into the waters at temperatures approaching 100 degrees. (Morris Daily Herald)

The weather has affected grain crops as well.  Corn futures– which sold for $2.00/bushel just 10 years ago -  have surged 60 percent since mid-June, closing yesterday at $8.075 a bushel.  The U.S. Department of Agriculture recently estimated U.S. corn yields will be at least 20% below the norm. 

(Business Week)  and (Forbes)

Of course, much of the grain that is being harvested is not going anywhere: The Coast Guard has closed an eleven-mile stretch of the Mississippi River near Memphis to shipping after another barge grounded near Greenville, Miss. (WANE.com)

And in Kansas, “Bare ground and stagnant ponds of water can be seen where a flowing Arkansas River should be.” According to The National Weather Service, the water has ceased to flow at I-235.“There's a quarter of a billion dollars worth of grain in the port of lake providence alone and guess what? we can't move the barge. so, we'll bring in trucks it will take 7,000 trucks. They don't exist,” said Louisiana Agriculture Commissioner, Mike Strain. (WKSN News)

 

And that means there's less water flowing down Mississippi river into the Gulf of Mexico, and less outflow means saltwater from the Gulf is creeping in.  Cities in Louisiana cities have had to purchase emergency drinking water…and the entire city of New Orleans is now at risk. (NPR)

The loss of grain crops also affect the livestock who feed on grain - and eventually, the price of meat on supermarket shelves.  And non-food livestock, such as horses, are affected, too.

Tony Caldwell, owner of an 80 acre horse rescue ranch in Indiana, reports “Everybody is using their winter hay now. The pastures are destroyed and they probably won’t recover before winter. The price of hay has doubled, and the availability is down by 75 percent…Today the problem is not nearly as bad as it’s going to be.  It’s terribly bad today, but it is going to get a lot worse.”  (Business Week)

The hotter weather will not only affect the prices of food, but of health care as well.  At least 8 deaths have been blamed directly on this summer’s heat, and that doesn’t count deaths, injuries, and property losses from western forest fires.  Nor does it include deaths labeled as ‘respiratory failure’ or ‘natural causes’ from the elderly living in homes without air conditioning.  And looming on the horizon is the nation’s largest outbreak of West Nile virus, fed by the drought.

The mosquito responsible for the West Nile virus flourished during the summer's record heat and drought.   Updated figures from the Illinois State Department of Public Health show extremely high numbers of the Culex pipiens species have tested positive for the disease — 71 percent in DuPage County and nearly 60 percent in Cook. Officials consider 10% problematic. National figures show 1,118 cases and 41 deaths have been reported to the CDC — the highest number of cases through the third week of August since the disease was first detected in this country in 1999, and a substantial jump from last week's tally of 693 cases and 26 deaths. And the number of reported cases through the third week of August this year is nearly three times higher than the average over the last 10 years, according to the CDC.  (Chicago Tribune)

 I don't care whether you believe that climate change is natural or man-made.  The incontrovertible fact is that our climate IS changing, and it IS warming, and it is CHANGING our landscape.  And whether this is part of a natural cycle or man-made, is immaterial:  We must respond to it if we are going to avoid more catastrophes like these.

How? By reducing our greenhouse gas emissions.

(1) Higher Fuel Efficiency Standards for autos are a no-brainer.  I have been disgusted for the last several years attending the New York International Auto Show at NYC’s Javits Center, and reading the mpg statistics on new models.  The auto industry thinks it's offering something wonderful when a new car get 23 mpg.  They just don’t get it. (Actually, they do:  they can continue to offer crappy mileage because they can count on Republicans to obstruct fuel standards, and on Democrats to bail them out.)

(2) Amtrak and High-Speed Rail.  This country lags decades behind every developed nation in the world, including China, which has caught up and surpassed us on rail technology. While politicians throw money away on road projects for their home districts, subsidies for oil companies, sweetheart deals to ram through oil pipelines, exemptions for deepwater off-shore drilling safety devices, and auto company bailouts…..they wring their hands and hem and haw about investing in rail. And the Republicans seek to slash Amtrak's budget every year, rather than seeing trains as part of the solution to smog-choked highways.

(3) Energy-neutral Buildings.  In Europe, architects presume that a building that consumes more energy than it creates contains a Design Flaw. While the U.S. Congress continues to wring their hands over energy legislation, the European Union is requiring all residential buildings to produce nearly as much energy as they consume by 2020, in part by using renewable power sources. Public buildings will have to meet this standard two years earlier.  In urban centers, rooftop gardens and solar panels on a massive scale can lower temperatures, counter emissions, and save energy.

(4) Intolerance for Local NIMBY Obstructionism. Some of the most progressive, greenest, liberal people I know suddenly become ardent conservatives when windmills are proposed in their neighborhoods, or on mountain ridges that will impede their personal views.  Too Bad.  It is given to Congress and Congress alone to regulate interstate commerce, and if there is any product that crosses state lines, it is the national electric grid.  Far too many wind farms have been bogged down in local obstructionism, and it must stop.

(5) Local Farms, Local Food.  EVERY community needs to be a Right-to-Farm community (yes, even urban and suburban communities.) Uptight zoning regulations that outlaw chickens, restrict vegetable gardens from front yards, insist on crippling health regulations, and outlaw raw products need to go.  The Obama administration has been problematic on the left (FDA raids on raw milk farms), while snooty Republicans have used zoning to protect the landscape of their precious ‘burbs.  The more food that can be produced locally, the less food that has to be transported on the nation’s highways - and the fewer dollars and reliance on Monsanto and AgriBusiness.

We need more than Republicans who wear blinders, and Democrats who offer lip service to Energy Policy.  

We need a New, Green Paradigm.  Now.

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BP's choice: Plunder Company Assets...and the U. S. Taxpayer

It is a time-honored operation: Enrich owners and Insiders while you are able by plundering a troubled company's assets.

In 1999, Service Merchandise (a retail chain) was forced into bankruptcy by its creditors. The Bankruptcy court froze the company's assets...except, of course, for the normal fees associated with 'administering' the bankruptcy and paying remaining operating costs. The Board of Directors of SM prompty hired themselves to administer the bankruptcy, and began draining the company of its cash assets. One upper-level manager, disgusted with their actions, leaked the plan to a unnamed blogger (ahem...), who prompty posted the details (using an anonymous handle) on the Yahoo! Finance Message Board for the company. When the news hit, SMs stock fell to less than a penny per share. The now-infuriated Management (who owned plenty of stock themselves) sued Yahoo!, asking them to reveal the source of the leak, claiming there were violations of Insider Trading laws. The Court declined to grant their request.

The year before Enron collapsed, top Executives paid themselves 1.4 Billon (yes, Billion) dollars.

In the eight years before the collapse of Lehman Brothers - which ignited the financial crisis that still affects us - the Chief Executive, Richard Fuld, took home 480 million dollars from the company.

Citigroup's Executive was paid 31 million the year they requested a taxpayer bailout.

Which brings us to BP.

BP insists it will pay all 'legitimate claims.' Does that mean they will compensate fishing charter businesses and shrimpers for the loss of their future earnings when they go out of business? Loss of tourism on Florida beaches? What precisely *is* a 'legimtiate' claim in their eyes? The estimated daily flow of oil has increased from 1,000 barrels per day when the crisis began, to the current 40,000per day. While no one yet knows the extent of this disaster, what is known is that this will cost, at a minimum, in the tens of billions of dollars.

So, it wouldnt make sense for BP to give away its assets...or would it?

BP announced it would decide next month whether keep a quarterly dividend of 14 cents a share for the second quarter, a payout of about $2.6 billion.

To be fair, BP regularly pays out this dividend to its investors, so it's not as if they are seeking a new venue in which to squirrel away assets. However, the prospect of untold bilions in clean-up costs, and the growing long-term possibility of a BP bankruptcy - means that taxpayers, once again, would be left with a bill that ought to be covered by Corporate assets. Regardless of their culpability, if BP runs out of cash, BP can't pay the bill.

Writing for the New York Times, William K. Black, an associate professor of economics and law at the University of Missouri–Kansas City, and author of “The Best Way to Rob a Bank is to Own One,” said:

"...Dividends not only put money out of the reach of the U.S., but also reward the people most responsible for causing the damage. BP’s officers and employees, in their capacity as shareholders are the most obvious example of this, but shareholders are also responsible as owners of the corporation. The deal shareholders make when they invest is that if the corporation cannot pay its debts to creditors the shareholders get nothing."

Not surprisingly, many British shareholders are furious that the issue of their dividends is even being discussed. Even some U.S. news commentators have questioned "punishing" the shareholders.

To them, I quote Juan de Medina, a Dominican monk writing in Salamanca, Spain, in 1550, and one of the world's first 'free market' economists:

"Those who by their own will go into business...must expose themselves to profit and loss. And when they suffer a loss, they must not transfer it to the buyers or to the Republic."

What he said.

Should BP declare a dividend, Congress needs to pass legislation requiring that oil companies engaged in deep-water drilling place cash in a cleanup escrow account...and if they won't act, then the businesses and States of the Gulf Coast should file enough claims to force BP into a Reorganization, in which case a Bankruptcy Court could then order that BPs assets remain within the corporation and within this country to pay for the cleanup.

Deepwater Horizon, BP, and the Minerals Management Service: The legacy of "Capture Theory."

Am I the only one who simply can not fathom how a major oil company can be permitted to engage in potentially catastrophic activities, and not have back up and safety plans? Is it rational to believe that a break in an undersea oil pipe could go on for week after week and no one has a clue what to do about it?!

The events unfolding off of the Louisiana coast were not unimaginable or unpredictable. In fact, what happened on the ocean floor was very predictable – so much so, that in the industry it is routinely called a “blowout.”

Now, wouldn’t it makes sense that if a company is going to undertake an activity that could result in a known, predictable disaster, that they should have a contingency plan in place? And that the government agencies regulating them (in this case, the Minerals Management Service, or MMS) should require them to have such a contingency plan?

In fact, most offshore drilling operations are required to have such contingency plans. But two years ago, the MMS changed the rules of the drilling game mid-stream, and exempted deep-water drilling operations from the need to submit an emergency plan. The Deepwater Horizon Project – the very disaster unfolding in the gulf – was one of the projects that was suddenly exempted. Instead, BP was permitted to submit a “regional” plan for dealing with “general spills” anywhere in the Gulf.

Unfortunately, that ‘general plan’ didn't quite have enough detail to help BP stop THIS leak as a result of THIS blowout at THIS location.

According to one MMS official – speaking on the condition of anonymity – “the rules were changed because some elements were impractical for some deepwater drilling projects in the Gulf”

http://www.cleveland.com/nation/index.ssf/2010/05/no_oil_spill_plan_rule_change.html

In other words, since a safe and effective contingency plan could not be established for the Deepwater Horizon Project – the MMS decided to eliminate the necessity of such a plan, rather than stopping the project form the beginning.

Such an action makes no sense...unless you are familiar with “Capture Theory,” a basic theory I cover in all of my introductory Economics classes. “Capture Theory” refers the fact that most citizens are too busy with survival and life to worry about every permit and hearing taking place before a government agency. A vested interest, however – such as BP before the MMS, or a pharmaceutical company before the Food & Drug Administration – has evry reason in the world to know exactly what is on the agency’s agenda, and who is making the decision on their application, and what the secretary’s name is and how the agency decision-makers like their steak cooked. Because the potential benefits of favorable treatment are so lucrative, it makes sense for corporations to hire lobbyists who wine and dine the agency officials. In the end, (to quote myself), “A vested interest will always capture the agency designed to regulate it, and then use that agency for its own advantage.”

Is this what happened here? Yes.

According to Fast Company,

“…[A] Department of Interior investigative report describes transportation to college football games on offshore oil company planes as well as offshore oil and gas sponsored golf outings, crawfish boils, skeet-shooting events, and hunting trips. A source also told investigators that MMS inspectors sometimes allowed oil and gas company employees onboard drilling platforms to fill out inspection forms [themselves].....many of the MMS inspectors had worked for the oil and gas industry and continued to be friends with industry representatives. “Obviously, we’re all oil industry...We’re all from the same part of the country. Almost all of our inspectors have worked for oil companies out on these same platforms. They grew up in the same towns. Some of these people, they’ve been friends with all their life. They’ve been with these people since they were kids. They’ve hunted together. They fish together. They skeet shoot together ....They do this all the time...”

http://www.fastcompany.com/1652231/meth-porn-guns-graft-at-agency-overseeing-gulf-oil-companies-interior-department-report?partner=rss

So…the blowout occurred, 11 men lost their lives, and oil began pouring into the Gulf. Couldn’t something be done? (Of course, 24 hours into the spill, a US Coast Guard spokesperson assured ABC news correspondent George Stephanopoulos on “Good Morning America” that there was no oil spewing from the well..)

In 1994, the US Government developed its own plan (the “In Situ Burn Plan”) to contain spills through the use of devices called fire booms. Like so many government plans, this proved to be a thick document that at some point was much-heralded, and then put on a shelf to collect dust. The plan called for the immediate use of firebooms, as a first response, to contain a spill. These firebooms can burn off 75,000 gallons of oil per hour, enough to have probably contained the spill to its current location.

Unfortunately, 16 years after the recommendation was made, the federal government did not own a single fire boom.

Eight days later, they were able to locate one for sale in Illinois. Several were eventually ordered from South America.

http://blog.al.com/live/2010/05/fire_boom_oil_spill_raines.html

Daily, we hear how this disaster continues to spread, and how livelihoods and ecosystems are both being ruined. And how BP is ‘hiring’ fishermen who are getting sick, and forcing them to sign non-disclosure statements. So the cover-ups and damage continue.

All because of an “accident?”

No, because of Corporate Fraud. And Corruption. And Government Inefficiency. And “Capture Theory.”

The result is, as far as I am concerned, has been a massive case of Criminally Negligent Trespass and Criminal Conspiracy between BP and the MMS.

Think about that the next time Vermont Yankee tells you that they are adequately regulated by the Nuclear Regulatory Commission, that contingency plans are in place, that every emergency situation has a well-thought out plan, that underground leaks are nothing to worry about, and that Strontium 90 in fish in the Connecticut River is no big deal